Bitcoin Weekly: Consensys 2018 Incoming

Last week we discussed how Bitcoin was approaching key levels. It hit the resistance line at $10k and unfortunately didn’t have the momentum to pull through. As a result we did see a substantial fall in price of nearly 18% on some exchanges. The timing of this pullback is interesting as well. The big news in the coming week is the largest crypto conference held in New York. We will explore the history of this conference and it’s impact on price below. Rest assured that the summer season is incoming and price is keeping everyone guessing which way this is going to break out.

Consensys 2018

Consensys is an annual conference held by popular crypto publication CoinDesk. This is going to be their 4th annual blockchain technology summit, May 14-16, 2018 at the New York Hilton Midtown. Over 4,500 attendees are going to be a part of it including the big companies such as Microsoft, IBM, Procter & Gamble, and Siemens, huge investors like CME Ventures, banks such as AMRO, ABN, Scotiabank, and Citi, and accountancy firms like EY, KPMG, and PWC.

The 2017 event triggered the bullish trend, will history repeat itself? Below are the statistics of price action of Bitcoin around the event. Please do not blindly go and buy, this is one data point and several factors have changed over the last 4 years. This should be one fundamental reason why you should be looking to see if you can find yourself a long setup that matches your trading plan.

Upbit Exchange Investigation

Upbit is South Korea's largest cryptocurrency exchange. It is being investigated by local police and investigators for alleged fraud. Upbit is a crypto-only exchange run by a subsidiary of Korean tech giant Kakao, and currently the fourth largest crypto exchange globally by 24-hour trade volume.

The investigations are allegedly claiming that the company has been tinkering with it’s balance sheet to deceive investors. Being such a large component of the total global trade volume this piece of news may have been a catalyst that pushed the price down drastically. The fragility of the market on exchanges has been the Achilles heel for the crypto markets. The sooner we can move towards decentralized exchanges we should begin to see greater stability in the markets.

Bitcoin has been acting as an escape proxy globally as economies like Valenzuela, Argentina and Zimbabwe are beginning to lose control of their currencies. Most governments will not be able to restrict this outflow and we will probably start to see stricter controls on traditional banking channels with regards to crypto.

$10bn Worth of Bitcoin in Bunkers

One of the bigger stories to do the rounds this week was an article published by Bloomberg around the hoarding of Bitcoins. This was an interesting article around a company called Xapo which is one of the largest players in the securing of your Bitcoins through vaults. The company has raised over $40m in funding from the best venture capitalists and includes the founder of Visa, former chairman & CEO of Citibank and former US secretary of treasury as advisers.

The startup which now is responsible for holding billions of dollars worth of Bitcoin has a simple hypothesis. If we are to see Bitcoin go mainstream we need to make the holding of your private keys easier. Their hypothesis is that through a secure and simple to use custodial service one could achieve this. This does go against the theme of decentralization where everyone is responsible for their own coins. However I do see the case where one would have millions of dollars in crypto.

Technical Analysis

There is no doubt that this week we did substantial damage from a technical point of view to the charts. We have lost the momentum that was building up over the last couple of weeks. Bearish divergences had started to grow near the fail level and we rolled over subsequently. The Upbit news acted as a catalyst to further accelerate the fall. If we take a look at the price chart we have been following:

We broke the 13EMA support that had been holding us up during the last 2 weeks. Price did briefly come into a potential buying window. We should continue to monitor volume action and news that will be breaking around the Consensys conference this week.

There is a possibility that we could see another sharp move down in price if we are not able to gather momentum over the coming weeks. At ProButterfly we are actively hunting potential setups that are coming both to the upside or downside.

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